Switching accountants: what actually happens, and when

Most directors who are unhappy with their accountant stay put for longer than they want to. The reason is usually the same: switching sounds like a lot of work, and nobody wants to risk a missed deadline or a letter from HMRC in the middle of it.

In practice, the handover is a well-trodden process. Accountants do it all the time, and most of it happens between the two firms rather than on your desk. Here's what to expect.

1. A first conversation

Before anything changes, you and the new accountant should talk through where the business is today: what's filed, what's due next, what software you use and what you want from an accountant that you aren't getting now.

This is also the point to agree the scope and the fee. You should come away with a written proposal, so you know exactly what's included before you commit.

2. The engagement letter and ID checks

Once you're happy, you sign an engagement letter. It sets out what the new accountant will do, what you'll provide, and the fee.

Your new accountant also has to carry out anti-money laundering checks before they can act for you. Expect to confirm your identity and the company's ownership. It's a legal requirement, not a sign of suspicion, and it usually takes a few minutes online.

3. Professional clearance

Next, your new accountant writes to your current one. Professional bodies expect this step: it asks whether there's any professional reason not to take you on, and requests the handover information.

You don't need to have an awkward conversation yourself. A short note or email telling your current accountant that you're moving, and asking them to cooperate with the handover, is enough. Your new accountant can draft it for you.

The handover information usually includes:

• the last set of accounts and tax returns filed
• the working papers and trial balance behind them
• any open queries with HMRC or Companies House
• payroll records and the latest payroll position
• VAT returns and the VAT scheme you're on

One thing to know: your own records, such as bank statements and invoices, belong to you. Your old accountant's working papers belong to them, though most will share what's needed for a smooth handover. An unpaid final bill can slow things down, so it's worth settling it.

4. HMRC and Companies House

Your new accountant needs authority to deal with HMRC on your behalf. This is done online through their HMRC agent account. You'll normally receive a link or code to approve, one for each tax they'll handle, such as corporation tax, VAT, PAYE and your personal self-assessment.

Until that's in place, HMRC can't discuss your affairs with them, so it's worth approving the requests as soon as they arrive.

For Companies House, your new accountant can file your accounts and confirmation statement once they have the company's authentication code (or are set up as your filing agent). The code was sent to your registered office when the company was formed; if you can't find it, a replacement can be requested.

5. Your bookkeeping software

If you use cloud software such as Xero or QuickBooks, the switch is mostly a matter of inviting your new accountant in as an adviser and removing the old one when the handover is complete. Your data stays where it is.

If you're on spreadsheets or desktop software, this is a good moment to decide whether to move to cloud software. It isn't compulsory, but it makes the monthly work, and your view of the numbers, much easier.

6. The first review

Once everything is in, your new accountant should check what they've inherited before relying on it: are the bank accounts reconciled, do the balances agree to the last accounts, and is anything due soon?

You should get a short summary of what they found and what happens next, including your next filing dates.

Do I need to wait for my year-end?

No. You can switch at any point in the year. Your new accountant picks up from wherever things stand, whether that's halfway through a VAT quarter or a few weeks before the accounts are due.

The one time to be careful is when a deadline is very close. If your accounts or a tax return are due in the next few weeks, agree with both accountants who is filing it, so nothing falls between the two.

A short checklist

If you're thinking about switching, it helps to have these ready:

• your company number and authentication code
• your Unique Taxpayer References (company and personal)
• your VAT number and PAYE reference, if you have them
• login details for your bookkeeping software
• your current accountant's contact details

In summary

Switching accountants is mostly paperwork that the two firms handle between them. Your part is a conversation, a signature, a short note to your old accountant and approving HMRC's requests when they arrive.

If you'd like to talk through what a switch would look like for your business, I'm happy to have a short call. There's no obligation, and I'll be clear about whether I'm the right fit.